Thames Tideway Tunnel

Lord Stoddart of Swindon Excerpts

Tuesday 15th January 2013 Lords Chamber

[Lord De Mauley]

My Lords, Ofwat has ensured that the regulatory ring-fence in Thames Water’s licence was tightened following its acquisition by Macquarie. The ring-fence licence conditions on Thames Water already include a condition requiring Thames Water to ensure that its dividend policy will not impair the company’s ability to finance its functions. As for alternatives to the tunnel, studies have looked at all kinds of alternatives over the past decade but none has shown a viable cheaper solution that would simultaneously address the current sewer overflow problems within a decade, deliver value for money and meet environmental objectives.

[Lord Stoddart of Swindon]

My Lords, this project has been known about for decades, I imagine, but over the past 10 years Thames Water has paid out £3.5 billion to shareholders. Should it not have known that that sort of money should have been saved to provide this essential ring system in London? Why should every customer of Thames Water pay for this project? Would it not be better if Thames Water did not pay any dividends for the next 10 years at the rate that they paid in 2012, and that covered the whole of the cost of the new project?

[Lord De Mauley]

What an interesting suggestion, my Lords. The standard model in the water sector is for customers to pay the financing costs of the company’s capital expenditure on underground assets together with a charge to reflect expenditure required to keep them in a serviceable state. I do not think that we would find investors if we were not able to finance it in this way.